CAIRO Egyptians in their millions danced and partied through the night on Saturday, celebrating the fall of the man who ruled like a pharaoh for 30 years and hoping their army will grant them democracy now Hosni Mubarak is gone.

With intoxicating speed a wave of people power has roared across the biggest Arab nation, just four weeks after Tunisians toppled their own ageing strongman. Now, across the Middle East, autocratic rulers are calculating their own chances of survival.

"I am proud to be Egyptian, that's the only way I can say it," said Rasha Abu Omar, a call centre worker, among the throngs on Cairo's Tahrir, or Liberation, Square. Eighteen days of rallies there, resisting police assaults and a last-ditch charge by hardliners on camels, had brought undreamt of success.

"We are finally going to get a government we choose," the 29-year-old Abu Omar added. "Perhaps we will finally get to have the better country we always dreamed of."

Hours after word flashed out that Mubarak was stepping down and handing over to the army, it was not just Tahrir Square but, it seemed, every street and neighbourhood in Cairo, Alexandria and cities and towns across the country that were packed full.

Through the night, fireworks cracked, cars honked under swathes of red, white and black Egyptian flags, people hoisted their children above their heads. Some took souvenir snaps with smiling soldiers on their tanks on city streets.

All laughed and embraced in the hope of a new era.

INFECTIOUS PEOPLE POWER

Journalists long used to the sullen quiet of the police states that make up much of the Middle East felt the surging joy of the population around them as a palpable, physical sensation.

Relayed by satellite television channels and on Internet social networking sites, the euphoria in Egypt flashed around a region where autocrats hold sway from the Atlantic to the Gulf.

It was just eight weeks to the day since a young Tunisian vegetable seller, Mohamed Bouazizi, set himself alight outside a local government building in the provincial city of Sidi Bouzid, protesting in this way at his ill-treatment by police, who had taken away his livelihood, and at venal, oppressive government.

Four weeks later, Tunisian President Zine al-Abidine Ben Ali had been forced to flee the country when his generals told him they were not prepared to defend him against protesters.

Now Mubarak, an 82-year-old who when this year began seemed ready to establish a new dynasty on the Nile by handing over to his businessman son, sits, impotent, in the Egyptian Red Sea resort of Sharm el-Sheikh and his generals hold power in Cairo.

In Algiers, thousands of police in riot gear were braced for action to stop a planned demonstration there on Saturday from mimicking the uprising in Egypt. Officials have banned the opposition march, setting the stage for possible clashes.

"It's going to be a great day for democracy in Algeria," said Mohsen Belabes, a spokesman for the small RCD opposition party which is one of the organisers of the protest.

In Bahrain, the oil-rich Gulf kingdom, officials were handing out cash worth over $2,500 to every family, to appease them ahead of protests opposition groups plan for Monday.

In non-Arab Iran, leaders hailed the victory of the people over a leader seen in Tehran as a puppet of Washington and Israel. But the White House said a clampdown on media coverage of the events in Egypt showed that Iran's Islamist rulers were "scared" of pro-democracy activists who have said they may renew the street protests that rocked Tehran in 2009.

"It's broken a psychological barrier not just for North Africa but across the Middle East. I think you could see some contagion in terms of protests; Morocco, perhaps Jordan, Yemen," said Anthony Skinner of political risk consultancy Maplecroft.

THE END, AT LAST

Mubarak's end was, finally, swift, coming less than a day after he had stunned protesters by insisting he would not step down despite widespread expectations that he was about to do so. It remains to be seen how the army will create democracy for the first time in a nation that traces its history back 7,000 years.

Vice President Omar Suleiman said a military council would run the country of 80 million for now. The council gave few details of what it said would be a "transitional phase" and gave no timetable for presidential or parliamentary elections. It said it wanted to "achieve the hopes of our great people".

Some question the army's appetite for democracy. Western powers, and Israel just across the Sinai desert border, worry about the electoral strength of Islamist groups.

In the United States, Mubarak's long-time sponsor, President Barack Obama said: "The people of Egypt have spoken." He stressed to the U.S.-aided Egyptian army that "nothing less than genuine democracy" would satisfy people's hunger for change.

He also acknowledged: "This is not the end of Egypt's transition. It's a beginning. I'm sure there will be difficult days ahead, and many questions remain unanswered."

Washington has pursued a sometimes meandering line since the protests began on Jan. 25, apparently reluctant to lose a bulwark against militant Islam in the Middle East but also anxious to endorse calls for political freedom.

END OF BEGINNING

Behind the celebrations, there was a note of caution over how far the armed forces under Field Marshal Mohamed Hussein Tantawi, Mubarak's veteran defence minister, were ready to permit democracy, especially since the hitherto banned Islamist Muslim Brotherhood is one of the best organised movements.

"This is just the end of the beginning," said Jon Alterman of the Center for Strategic and International Studies.

"Egypt isn't moving toward democracy, it's moved into martial law and where it goes is now subject to debate."

U.S. officials familiar with the Egyptian military say Tantawi, 75, has long seemed resistant to change.

Suleiman, a 74-year-old former spy chief, annoyed some this week by questioning whether Egyptians were ready for democracy.

Al Arabiya television said the army would soon dismiss the cabinet and suspend parliament. The head of the Constitutional Court would join the leadership with the military council.

The best deterrent to any attempt to maintain military rule could be the street power of protesters who showed Mubarak they could render Egypt ungovernable without their consent.

But as continued turmoil in Tunisia shows a month after the overthrow of the strongman there inspired young Egyptians to act, any government will face huge social and economic problems.

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